8 - Material Circumstances Flashcards
What 2 things would affect the judgment of a prudent insurer in considering
A) whether or not to accept the risk
B) if willing to accept the risk; at what premium and on what terms and conditions
Consumer. The proposer has a duty to:
take reasonable care not to make a misrepresentation
Non-consumer. The proposer has a duty to:
Make a fair presentation of information relating to the risk of the insured
Which 6 things do not need to be disclosed:
- Circumstances that lessen the risk
- Circumstances that the insurer knows
- Circumstances the insurer ought to know
- Circumstances the insurer is presumed to know
- Circumstances where the insurer has waived its rights
- Circumstances that a survey would have revealed
What does the rehabilitation of offenders act 1974 as amended by the legal aid, sentencing and punishment of offenders act 2012 mean:
Depending on the period of time and upon the severity of the original sentence imposed convictions become spent and don’t need to be disclosed.
They are halved for those below 18 yrs of age at the DATE of the conviction except for custodial sentences of up to 6 months where the buffer period is 18 month
What are the following rehabilitation period for custodial sentences 0-6 months?
Length of sentence+ 2 years
What are the following rehabilitation period for custodial sentences 6-30 months?
Length of sentence+ 4 years
What are the following rehabilitation period for custodial sentence 30months - 4 years
Length of sentence+ 7 years
What are the following rehabilitation period for custodial sentence over 4 years?
Never spent
What is the following rehabilitation period for non-custodial sentence community order and youth rehabilitation?
Length of sentence+ 1 year
What is the following rehabilitation period for non-custodial sentence conditional charges?
Period of the order
What is the CIDRA
Consumer Insurance (Disclosure and Representation) Act 2012: disclosure by private individuals is covered by CIDRA
Consumers are required to take legal care not to make a misrepresentation and the emphasis is on the insurer to ask the right questions in a clear way
Disclosure of private individuals is covered by what
CIDRA
Under CIDRA what happens if the misrepresentation was honest and reasonable
The insurer must pay the claim
Under CIDRA what happens if the misrepresentation was careless
The insurer can act as it would have done if the question had been answered correctly. I.e charge a higher premium, apply exclusion, etc
Under CIDRA what happens if the misrepresentation was deliberate or reckless
The insurer is entitled to treat the policy as void and decline all claims
What is the Insurance Act 2015
To make a fair presentation of the risk involved; disclose every material circumstance that the insured knows or ought to know.
Making a fair presentation also means insurers need to take responsibility for asking questions and probing for info.
Under the insurance act, what is a qualifying breach?
Where the insurer would not have entered into the contract at all or would have done it under different terms
Under the insurance act if the breach is deliberate or reckless what can the insurer do:
A) void the contract and refuse to pay the claims
B) don’t have to return any of the premiums paid
Under the insurance act what happens if the breach was not deliberate or reckless
- If the insurer wouldn’t have written the risk at all they can void the contract but must return the period paid
- If they would’ve charged a higher premium it can proportionality reduce any claims payments
- If they would’ve added special terms they can but the insurer can’t seek to avoid the policy
What is a peril
The event giving rise to the loss itself
What is a hazard
The factor that might alter the frequency and severity of the peril occurring
What is a physical hazard?
Relates to the physical characteristics of the risk
What are the physical hazards of fire insurance?
A) construction of the building
B) provision of fire fighting equipment
C) trade processes
What are the physical hazards of theft insurance
A) construction of the building
B) security feature
C) contents in the building
What are the physical hazards for the motor?
A) age of the driver
B) make and model of the vehicle
C) place it’s kept
D) the use of the vehicle
What are the physical hazards for EL?
Industrial processed in a factory ie guarding of machinery
What are the physical hazards for personal accident and sickness?
A) proposers occupation
B) dangerous pastimes
Name the most serious example of poor moral hazard
False or exaggerated claims
What is a common example of poor moral hazard?
Lack of care of the insured i.e. lack of guard for employees or physical property
Why do insurers use proposal forms
It is the most convenient, speedy, and cost effective
What are the 6 general questions on a proposal form?
A) Name B) Address C) Occupation D) Age E) Details of past insurance F) Details of other insurances
What 4 specific things are needed to quote on a proposal form
Detail of previous claims
Period of insurance
The subject matter of the insurance
Sum insured ( the rate the premium is based on- a rate per cent £100 or per Mille £1,000)
What are specific questions that are risk specific for Motor?
Age of driver
Criminal prosecutions
What are specific questions that are risk specific for Liability?
Noise risks
Pollution hazards
Work away from the premises
Contracts entered into
What are specific questions that are risk specific for fire?
Manufacturing process
Storage arrangements
Building construction
What are specific questions that are risk specific for Theft?
Breakdown of types of stock
Security precautions
Proposal forms are used by underwriters as a means of obtaining material facts because:
A) it is a regulatory requirement
B) it’s convenient and cost effective
C) it prevents misrepresentation by the proposer
D) it provides an opportunity for collecting product and design information
it’s convenient and cost effective
What is a Market reform contract?
Carries full details of the risk in a recognised format and is often used in the London market
Originally part of the slip used at Lloyd’s
What are the three elements of the market reform contract?
Meetings with the client - usual in commercial
Writing to the proposer- personal
Internet search
What is the purpose of a proposal form?
To gather all material facts for deciding on acceptance and terms for the risk
